What BTC miners were told (and believed) about the Lightning Network in 2016 by Core
Thanks to u/don2468 for pointing me at historical reddit archives, I finally found the historical note about the LN marketing given to Chinese miners by Core representatives:
u/rync commented:
Maybe this is common knowledge/obvious by now, but the incentives finally made sense to me when Bitmain's Jihan Wu explained to the Chinese community why miners sided with core (also, it's neat how just as the west has direct community participation by developers, the east has direct participation by miners in their community).
In a post on 8btc, responding to how miners will survive when transactions are offchain, he says:
During the Hong Kong meeting, the answer provided by Core reps is that the future Lightning Network would increase capacity a thousandfold - that up to tens of thousands of transactions can be completed on the lightning network and settled with one on chain transaction. Assuming that current transaction fees are 0.3 RMB, and assuming that 1000 lightning transactions can be settled by one blockchain transaction, then we can raise fees for on chain transactions to 30 RMB (100x increase), while each transaction on the lightning network would only cost a tenth of current fees and increase miner revenue a hundredfold.
Looking at the median transaction fees on BTC in for 2nd March 2016, I get 0.046 USD. (bitinfocharts)
The same graph hit $9 in May '23, and nearly $8 in Nov '23, and is currently at > $5 .
That is the median transaction fee, a robust indicator.
That is, on the face of it, a 100x increase from 2016.
In the news during these year, we have Lightning wallets closing up shop due to not being able to operate in the extremities of the BTC "fee market", and others (e.g. Wallet of Satoshi) withdrawing from markets presumably because regulators are cracking down on their custodian / money-transmitting nature.
During all this, the predicted volume of the LN has not materialized as the UX of LN is exceedingly bad unless it's used custodially, which is why the vast majority of LN users use it custodially. (There is a diagram showing something like only a couple of percent of LN users using it non-custodially - while this was always marketed as one of the main benefits of BTC's scaling approach through Lightning: "decentralization").
I wonder what miners today think about the explanations of Core and Blockstream.
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